Transcript HIPAA Update

PBMs and the Fraud and Abuse Wars:
A Few Observations
Bill Sarraille, 202-736-8195, [email protected]
BEIJING BRUSSELS CHICAGO DALLAS GENEVA HONG KONG LONDON LOS ANGELES NEW YORK SAN FRANCISCO SHANGHAI SINGAPORE TOKYO WASHINGTON D.C.
First Things First
• My Bias: The Manufacturer’s Perspective
• Discounts, Rebates, and Admin Fees
• Relationships in Search of a Safe Harbor
• The Options: GPO, Discount, and Personal Services Safe
Harbors
• Imperfect Options and the Effort to “Come Close”
– The Complication of Trying to Figure out if the Government
Will See the Outcome as Positive or Negative?
– Is “Switching” Good or Bad?
– In the Eye of the Beholder
• Should Manufacturers Even Ask for Clarification?
• The Old Debate Revisited: Can the Statute Be Trumped by
a Safe Harbor?
Transparency: A Complicated Issue
• Enforcement Really Has Shaped the Policy Debate Here.
• There Are Some Strong Transparency Arguments to Be
Made.
– What Is the Value of a Rebate If It Does Not, in Fact,
Translate to Reduce Costs?
– That Begs the Question, of Course, about What Actually
Happens to Those Rebates.
• Interestingly, at Least from the Legal Perspective,
Manufacturers’ Counsel Can Find Themselves Somewhat
Aligned with the Pro-Transparency Forces of the World.
– Making the Discount Safe Harbor Make Some Sense.
• But Is Transparency the Unqualified Good that Some in
Enforcement Believe It to Be?
Some Concerns about Transparency
• Will Manufacturers Resist Making Concessions?
– What Does the BP Experience Tell Us?
• Will Transparency Undermine the PBMs’ Position in the
Market Place?
• Is the Enforcement Push for Transparency at Odds with
Congressional Policy?
– Clearly Elements of Transparency in DIMA
– But Clearly Transparency Was Not Seen as an Absolute Good,
Either.
• Let’s Think about Both the Discount Drug Card and the Part B
Competitive Acquisition Program
• Which Begs the Question: Should Policy Be Driven by
Enforcement?
A Few Quick Words
about the Supervision Issues
• First, There Is Nothing New under the Sun.
• Second, the State Laws Are Not Always a Model
of Clarity.
– What Level of Supervision Is Required?
• Third, Not So Clear What the Tie to a False Claim
Is.
– True, Sometimes There is a Contractual Hook.
– But Not Always.
– The Implied Warranty Theory as the “Answer”
– But What about the Concept of Materiality?
– Coulds and Maybes
The Next Shoe to Drop
• PBMs: Whither Will They Go in the Post-DIMA World?
– Primary Player or Subcontractor?
– Interesting Business Call
• Are There Really Adequate Protections for Patients and
Manufacturers in DIMA?
• There Is Good There.
– Some Examples
• But There Are Some Clear Vulnerabilities
– A Skewed Version of Cost Effectiveness?
Some Specific Concerns
• Decisions Must Be Made by a Pharmaceutical and Therapeutic
Committee
– Limited Protection There, However
• Only One Member of the Committee Must Be a Practicing Physician and One
a Practicing Pharmacist Who are “Independent and Free from Conflict.”
• Majority of Members Must Be Physicians or Pharmacists
• Committee Standards Are Such as to Facilitate Formulary
Restrictions
– Clinical Decisions to Be Based on the “Strength of the Scientific
Evidence and Standards of Practice”
– Statute Points to “Peer-Reviewed Medical Literature”
• Which Term Refers, in Turn, to “Randomized Clinical Trials, Pharmaeconomic
Studies, Outcomes Research Data, and Such Other Information the
Committee Determine[s to Be] Appropriate”
– Allows the P&T to Assert a Very High Standard
– Committee Must Also “Take into Account” Whether a Particular Drug
Has “Therapeutic Advantages in Terms of Safety and Efficacy.”
The Class and Category Powers of Plans
• Basic Rule Is that 2, But Only 2, Drugs Must Be Selected for Each
“Class” of Drugs.
– Implication: Class Determinations Will Further Support the
Restriction Powers of the Plans.
• CMS Will Seek, in Essence, a Safe Harbor on Class
Determinations from the United States Pharmacopeia
– Consultation Requirement, But Pharmaceutical Companies Not Listed
– Common Problem
• Implication: Pharmaceutical Companies Will Need to Develop Relationships
with Those Who Have a Voice and Supportive Materials
– But Plan Not Bound by That Safe Harbor
• Some Countering Provisions Present Here
– Plans Cannot Change Classes During Plan Year, Except in the Case of
“New Therapeutic Uses and Newly Approved Covered Drugs”
Implications of the Formulary Standards
1. Standards Should Be a Major Aid to Plans that Want to
Restrict Formularies, Particularly for Off-Label Uses
2. Tremendous Increase in the Relative Need for Research
and, Particularly, for Pharmaeconomic Research
1. Note the Restrictive Focus of Pharmaeconomic Issue —
Reflection of Plans’ Interests
3. Comparative Research Made More Important and Will Be
Essential in Some Cases
4. Remember the Limited Time Available to Affect Initial
Determinations — Pharmaceutical Companies Will Need to
Manage Resources in This Period Carefully
5. Litigation Likely
6. Will the Manufacturers Seek Help from the Enforcers?